Common equity and Puff: Difference between pages

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''Banking - capital adequacy.''
''Contract law.''  
The law distinguishes between a reliable claim that induces a person to enter into a contract and 'mere puff', which does not. 


A bank's common equity is its ordinary share capital and certain accounting reserves including retained profits.
It is regarded as being no more than the salesperson's harmless praise of their product.


For bank capital adequacy purposes, certain items are excluded from the calculation of common equity.


The excluded items include amounts which would be difficult for the bank to realise under stressed conditions, for example intangible assets and most deferred tax assets.


== See also ==


Basel III raises the minimum level, after all deductions, to 4.5% of risk weighted assets.
* [[Condition]]
 
* [[Contract]]
Together with the Capital Conservation Buffer of 2.5%, the minimum total common equity standard becomes 7%.
* [[Term]]
 


== See also ==
[[Category:Compliance_and_audit]]
* [[Basel III]]
* [[Capital adequacy]]
* [[Capital Conservation Buffer]]
* [[CET1]]
* [[Deferred tax]]
* [[Equity]]
* [[Intangible assets]]
* [[Ordinary shares]]
* [[Preference shares]]
* [[Preferred stock]]
* [[Reserves]]
* [[Share]]
* [[Tier 1]]

Latest revision as of 14:07, 6 July 2022

Contract law.

The law distinguishes between a reliable claim that induces a person to enter into a contract and 'mere puff', which does not.

It is regarded as being no more than the salesperson's harmless praise of their product.


See also